A busy week lies ahead for the markets, as earnings season continues with Magnificent 7 members Microsoft, Meta, Apple, and Amazon all reporting.
A slew of economic data from the Eurozone and the U.S. is also due, alongside interest rate decisions from the Bank of Japan, U.S. Federal Reserve, and the Bank of England.
Here are the week’s key events:
The week starts off slowly with month-on-month German retail sales figures close to the only notable event on the calendar. Markets will be turning their attention to some key inflation data readings and earnings from members of the Magnificent 7 — Microsoft, Meta Platforms, Apple, and Amazon — later in the week.
Earnings: McDonald's (MCD)
Tuesday sees the release of a slew of European economic data, with France and Italy reporting GDP figures. Spain is also in the mix with its MoM and YoY CPI and GDP data, but markets will likely be fixated on Germany’s GDP, as well as the GDP reading for the broader Eurozone, with recent reports suggesting that growth may be slowing down — an observation that seems to be shared by the European Central Bank, as indicated by President Christine Lagarde at last week’s press conference.
Microsoft will be the first Magnificent 7 member to report earnings this week, with Apple and Google-parent Alphabet recently coming up short and dropping U.S. stock futures.
The U.S. Bureau of Labor Statistics will also release its JOLTS job openings survey for June, with vacancies last reported at 8.14 million in May.
Earnings: Microsoft (MSFT), Merck&Co (MRK)
The Bank of Japan will make its interest rate decision public in the early hours. It could be a crucial week for the Japanese yen, with USD/JPY weakness a key focus for policymakers over the past several months. On Friday, July 19, the Japanese government revised its growth forecasts for the fiscal year ending March 2025 from 1.3% to 0.9%. Despite the weaker growth forecasts, rumors of a potential BoJ rate hike continue to circle.
In Europe, the central event on Wednesday will be the release of Eurozone CPI inflation data.
The Fed will round off the day’s major economic news, with markets largely anticipating the U.S. central bank to keep its benchmark interest rate unchanged in the 5.25%-5.50% range at its July 30-31 meeting. However, the upcoming policy statement may include revised descriptions of the economy and outlook, potentially setting the stage for a rate cut in September.
Facebook-parent Meta Platforms follows Microsoft as the second megacap tech company to release earnings this week.
Earnings: Meta Platforms (META)
The Bank of England (BoE) will meet on August 1 to announce its next steps regarding interest rates. The BoE will also present its latest inflation and growth forecasts in the Monetary Policy Report.
Recent weeks have seen big swings in UK interest rate expectations, with speculation about whether the BoE might cut rates for the first time since 2020. Currently, the market anticipates around a 50% chance of a rate cut at this meeting, with just over 1.5 rate cuts priced in for the remainder of 2024.
Apple and Amazon will be the third and fourth members of the Mag 7 to report earnings this week.
Earnings: Apple (AAPL), Amazon (AMZN), Intel (INTL)
The US Nonfarm Payrolls Report is due on Friday. Markets are increasingly confident that the Federal Reserve will cut interest rates this year, driven by recent indications of labor market rebalancing, according to researchers at Danske Bank. Despite nonfarm payrolls growing by 206,000 in June, exceeding the consensus estimate of 190,000, the other parts of the previous Jobs Report mainly showed cooling signals. Only 136,000 of the new jobs occurred in the private sector, hinting less aggressive demand for labour than previously, while the unemployment rate crept up to 4.1%, as the size of the labour force continued to expand (+277k) still largely driven by foreign born workers (+235k). “That said, it must be noted that demand for labour is yet far from collapsing, affirming that overall labour markets remain solid”, wrote the analysts at Danske.
Fed Chair Powell has also noted that the labor market is no tighter than pre-pandemic levels, while also reminding that conditions were very strong at that time.
Oil and energy giants Exxon Mobil and Chevron round off the major earnings reports today.
Earnings: Exxon Mobil (XOM), Chevron (CVX)
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